Business experts warn SMEs are at breaking point following today’s news that inflation has rocketed at its fastest rate in four decades.
The Office for National Statistics’ (ONS) Consumer Prices Index shows inflation rose to 9 per cent in the year to April from 7 per cent in March. It says this was the fastest measured rate since records began in 1989 and estimates it to be the highest rise since 1982.
Experts say the spike in inflation is being partly driven by the soaring cost of energy bills, which increased by 54 per cent for the average household in April.
Alan Thomas, UK CEO at Simply Business, one of the UK’s largest providers of small business insurance, comments: “Small business owners are at breaking point – feeling the crippling pressure of rising costs, energy and fuel prices. With inflation at a 40-year peak, SME owners, particularly sole traders and micro businesses, will feel the pressure of paying more for products and materials. At the same time, consumer purchasing power is going down, meaning SME owners could be hit with a decrease in revenue.
“High inflation is squeezing small business owners while many are still in a crucial recovery period. The eye-watering cost of Covid-19 for SME owners, including lost work, earnings and loan repayments, now sits at a total of £109.6 billion according to one of our recent surveys. One in six also believe they will never recover financially from the pandemic. As a result, two in five (46 per cent) SMEs are calling for long-lasting financial support from the government to help them get back on their feet after Covid-19.
“Accounting for over 99 per cent of all UK businesses and contributing trillions of pounds in turnover every year, small businesses sit at the heart of our communities and are vital to our economy. Ultimately, we need to hear more from the government on its plans to support and act for the sake of UK small businesses. Put simply, if the UK is to recover from the effects of the pandemic, and to avoid the recession the country is heading for, we need small businesses to bounce back.”